Can Asian economies fuel Asia's growth?

There have been fears that a global slowdown may hurt Asia's export-dependent economies

Asian nations, led by China, have become the key driver of global economic growth in recent years.

But despite their robust performance, there has always been an element of doubt attached to their success.

Critics have warned that they are too dependent on demand from the west, the US and Europe in particular, to drive their growth.

The fear has been that as growth in the US and Europe slows, Asia's export-led economies will suffer as well.

But things may be starting to change.

"This is the era of Asian-consumption led global growth," says Shaun Rein, managing director of China Market Research Group.

"From a region wanting to be an economic superpower, Asia has become one. It now rivals the US in terms of global economic and trade influence," he adds.

'Big readjustment'

And this is the reason why analysts are backing the Asian consumers.

The rise of China in the last 10 years has done a great deal to reduce Asia's dependency on the EU and the USRajiv Biswas, IHS Global Insight

According to China's Foreign Minister Yang Jiechi, China's trade with Asian countries is now more than its trade with the US and Europe.

Beijing's trade with its neighbours rose to $1.2 trillion (£800bn) in 2012 - $120m more than its combined trade with the European Union (EU) and the US.

There are a number of factors behind the trend, not least the rise of China as a consumer of goods and raw materials.

China's economic growth in recent years, which has seen it become the world's second-largest economy, has been accompanied by the emergence of a more affluent middle class.

Rising income levels have resulted in a rise in domestic consumption, boosting demand for imports for items ranging from cars to electronic goods.

At the same time, big infrastructure projects, another key driver of China's growth, have driven up demand for raw materials from resource-rich countries such as Indonesia.

"If you look at the Asian exports, there has been quite a big readjustment in the markets," says Rajiv Biswas, chief economist for Asia-Pacific at IHS Global Insight.

"The rise of China in the last ten years has done a great deal to reduce Asia's dependency on the EU and the US."

Mr Biswas adds that the trend is likely to continue over the next decade as China's economy is forecast to grow at a faster pace than that of the US and EU.

Asian demand

And it is not just China that has seen a jump in domestic demand.

Other countries in the region such as Indonesia, the Philippines and Thailand have also seen domestic consumption rise in recent times.

Analysts say that demand in these economies has been boosted in part by rising income levels, and also by attempts by policymakers to sustain growth amid global economic problems.

They say that as the global financial crisis and the eurozone's debt issues hurt global demand in recent years, many of the economies in Asia eased their policies to help stoke domestic consumption to sustain growth.

Mr Bajoria explains that rising consumption in these countries is helping drive up demand for intra-Asian exports.

"Given the linkages between these economies, they are basically feeding into each other's growth," he says.

'Another locomotive'

Mr Bajoria's comments are backed by the trade figures of the Association of Southeast Asian Nations (Asean), a 10-member bloc which includes the Philippines, Indonesia, Singapore and Thailand.

As wages rise in China, many companies are setting up factories in other countries such Vietnam and Cambodia. That is creating a whole new middle class in those countries, with more disposable incomesShaun Rein, China Market Research Group